The battle of Teutoburg Forest and consequently Augustus' reaction to hearing about the defeat have been fairly romanticised, both at the time and by later historians. Suetonius provides us the description of Augustus wondering around shouting the famous 'give me back my legions', and the sheer incompetence of Varus as a general also make it a case study in arrogance. Combined with the theme of betrayal, as the Roman-educated Arminius betrayed the Romans and led them into ambush, the battle takes on a life of it's own.

Aside from this, the battle represented an end to the expansion of the empire that had taken place over the last fifty years, and a stain on the rule of Augustus.

Teutoburg Forest supposedly haunted Augustus for years and is often held responsible for the fact that the Romans never again tried to conquer Germania

As a follow up, is this even strictly true? What about the campaigns of Germanicus?

Clarifying question: are there battles in previous centuries with more Roman casualties than Teutoburg Forest that were not a part of the conflict with Hannibal, as Trebia and Cannae were?

The tale of Arminius and the defeat of the Roman Legions at Teutoburg is strongly tied to the rise of German nationalism and national identity in the 19th Century. Arminus has a huge statue in the Teutoburger Wald, near Detmold, was the subject of a number of plays and operas. Arminius (in the German legends) united the German tribes, kept them from falling under the domination of the Romans. So the German people should once again be united. This was a very strong narrative right up through the Nazi period, as Hitler portrayed himself as the new Arminius in the 1933 election. As German historians like Hans Delbrück were translated into English helped spread the myth.

So, is the myth right? The Romans certainly never reconquered Germania proper, only the border regions. Germanicus did lay waste to a good chunk of it in his campaigns, which were only brought to a halt by Tiberius, and decisively defeated the German tribes in a pitched battle. So why did they stop?

The revolt in Illyricum had cost the Romans dearly. While they may not lost a complete legion, they evidence suggests the losses were very high. Augustus was reduced to taxing Roman inheritances to pay for it. They drafted Romans...something that hadn't happened since Hannibal invaded. They recruited freedmen and slaves. This meant they couldn't replace losses. Varus' three legions were likely under-strength. One of the main complaints of the Rhine legions that revolted was they'd been affected by a 'stop-loss' order...some were still serving past their 25 year enlistment and others had been drafted and wanted out, all due to the losses in Illyricum.

So the Rome that Tiberius inherited was broke and whose army was in poor condition. He had just fought for three bloody years in the Balkans. And he wasn't well-liked by the Senate. He had fought in Germania, and had lost his brother, Drusus, there. He understood the logistical difficulties of fighting in Germania...supply by boat along the Weser and Elbe were only possible in the summer, and supply beyond the Elbe was nearly impossible (requiring ships to transit around Jutland).

Tiberius had one other problem: Germanicus. His nephew was popular, as was his wife, the strong-willed Agrippina. And Germanicus commanded eight legions just on the other side of the Alps. So Tiberius ended the campaigns in Germania and sent Germanicus east. The was the last time one governor in Gaul commanded all eight legions...they were split into two military zones, and later separate provinces (Germania Inferior and Germania Superior*). It is certainly likely that Augustus' deathbed command to limit the borders of Rome came from Tiberius himself.

Arminius the Liberator. Myth and Ideology, Martin M. Winkler

Rome's Greatest Defeat. Massacre in the Teutoburg Forest, Adrian Murdoch